A District Court judge in Kansas has granted a plaintiff’s partial motion for summary judgment in a Fair Credit Reporting Act case over the reasonableness of an investigation into a dispute conducted by a furnisher.
The background: The dispute began after the plaintiffs, who had rented an apartment in Colorado, delivered a cashier’s check to cover the final balance on their lease before moving out. A representative at the apartment complex confirmed receipt of the payment in an email sent the same day.
- Shortly after the lease ended, however, the property’s billing department contacted the plaintiffs stating that the balance remained unpaid. The plaintiffs responded with documentation showing the withdrawal from their bank account and the earlier email confirming receipt of the cashier’s check. Despite this, the account was eventually placed with a collection agency and reported to the national credit reporting agencies.
- The plaintiffs repeatedly disputed the debt, first directly with the collection agency and later through the credit reporting agencies. Their disputes included the bank withdrawal screenshot and the email in which a property manager had confirmed receiving the cashier’s check.
- After receiving the disputes from the credit reporting agencies through automated credit dispute verifications, the furnisher reviewed its internal account notes and prior communications with the apartment complex. Those records indicated that the property management company could not locate the check in its systems. The furnisher verified the account as accurate and continued reporting the debt.
The ruling: Judge Julie A. Robinson of the District Court for the District of Kansas held that the furnisher’s investigation was unreasonable under the FCRA. The key issue was that the dispute notices transmitted by the credit reporting agencies included new documentation that had not been part of the furnisher’s earlier investigations.
- Among those materials was the email from the property manager confirming receipt of the cashier’s check. According to the court, this document created a clear conflict with the furnisher’s existing records indicating the payment had never been received.
- Despite that conflict, the furnisher did not contact the property manager or otherwise attempt to reconcile the discrepancy. Instead, it relied on earlier communications suggesting the payment could not be located.
- Judge Robinson found this approach insufficient. As the judge explained, once the furnisher received new evidence through the dispute process, a reasonable investigation required more than simply verifying the account based on prior information.
- The court noted that the furnisher “did not take additional steps to reconcile” the confirmation email with later statements that the payment could not be found. It instead treated the dispute as duplicative of earlier complaints and verified the debt without further inquiry.
- Because the record showed that the furnisher ignored documentation that directly contradicted its records, the court concluded that “no reasonable jury could conclude that Defendant conducted a reasonable investigation.”
- As a result, the court granted the plaintiffs partial summary judgment on liability and denied the furnisher’s motion for summary judgment.
